News & Current Affairs

September 27, 2008

McCain and Obama spar in first debate

McCain and Obama spar in first debate

US presidential rivals Republican John McCain and Democrat Barack Obama have attacked each other over foreign policy and the economy, in their first debate.

Mr Obama said a $700bn (£380bn) plan to rescue the US economy was the “final verdict” on years of Republican rule.

He said Mr McCain had been “wrong” on Iraq and tried to link him to President Bush. The Republican senator described his rival as too inexperienced to lead.

Neither landed a knockout blow but polls suggested Mr Obama did better.

An immediate telephone poll by CNN and Opinion Research Corp found 51% said Mr Obama had won, to 38% for Mr McCain.

A poll of uncommitted voters by CBS News found that 39% gave Mr Obama victory, 25% thought John McCain had won, and 36% thought it was a draw.

Both campaigns claimed victory, with Mr McCain’s team saying their candidate had shown a “mastery on national security issues” while Mr Obama’s aides said he had passed the commander-in-chief test “with flying colours”.
All things considered, it’s about a draw
Matthew Yglesias, Think Progress

First presidential debate scorecard
Analysis: McCain wins on points
Send us your comments
US voters’ views

Tens of millions of Americans were expected to watch the debate on TV, with only about five weeks to go before the 4 November elections.

Senator McCain said he did not need “any on-the-job training”.

“I’m ready to go at it right now,” he added.

But Senator Obama said Mr McCain had been “wrong” about invading Iraq and that the war had led the US to take its eye off the ball in Afghanistan, where it should have been pursuing al-Qaeda.

Mr McCain argued that as a result of the “surge” – which involved sending some 30,000 extra US troops to Iraq – US military strategy was succeeding.

“We are winning in Iraq and we will come home with victory and with honour,” he said.

The televised debate in Oxford, Mississippi, focused largely on foreign policy but began with discussion of the economic crisis gripping the US.

Speaking about the financial bail-out plan under discussion by the US Congress, Mr Obama said: “We have to move swiftly and we have to move wisely.”
NEXT DEBATES
2 Oct – vice-presidential rivals. Topic: Domestic and foreign policy
7 Oct – presidential contenders. Topic: Any issues raised by members of the audience
15 Oct – presidential contenders. Topic: Domestic and economic policy

Mr McCain said he believed it would be a long time before the situation was resolved.

“This isn’t the beginning of the end of this crisis,” he said. “This is the end of the beginning if we come out with a package that will keep these institutions stable and we’ve got a lot of work to do.”

Mr McCain attacked Mr Obama over his record on finance, saying he had asked for millions of dollars in so-called “earmarks” – money for pet projects – as an Illinois senator.

The Republican also suggested a spending freeze in many areas apart from defence, but Mr Obama likened the proposal to using a hatchet when a scalpel was needed.

Both candidates agreed that the bail-out plan would put massive pressure on the budget of the next president and mean cuts in government spending.

‘Serious threat’

Asked about Iran, Mr McCain stressed that Tehran was a threat to the region and, through its interference in Iraq, to US troops deployed there.

He outlined a proposal for a “league of democracies” to push through painful sanctions against Tehran that were presently being blocked in bodies like the United Nations because of opposition from Russia.

He criticised Mr Obama for his previously stated willingness to hold talks with the leaders of Iran without preconditions.

Mr Obama rejected that criticism, saying he would reserve the right as president “to meet with anybody at a time and place of my choosing if I think it’s going to keep America safe”.

However, he said he agreed with his Republican rival that “we cannot tolerate a nuclear Iran” and the threat that that would pose to Israel, a staunch US ally.

‘Safer today’

Mr McCain accused Mr Obama of “a little bit of naivete” in his initial response to the conflict between Georgia and Russia.

“Russia has now become a nation fuelled by petro-dollars that has basically become a KGB [former secret services name] apparatchik-run government. I looked in [Russian Prime Minister Vladimir] Mr Putin’s eyes and I saw three letters – a K, a G and B,” McCain said.

Speaking about the so-called war on terror, Mr McCain said he believed the nation was safer than it had been the day after the 11 September 2001 terror attacks but there was still a long way to go.

Mr Obama pointed to the spread of al-Qaeda to some 60 countries and said that the US had to do more to combat that, including improving its own image as a “beacon of light” on rights.

“One of the things I intend to do as president is restore America’s standing in the world,” Mr Obama said.

Mr McCain sought to distance himself from President George W Bush’s administration, which has very low public approval ratings.

“I have opposed the president on spending, on climate change, on torture of prisoners, on Guantanamo Bay, on the way that the Iraq war was conducted,” he said.

“I have a long record and the American people know me very well… a maverick of the Senate.”

Mr McCain had earlier vowed not to attend the forum in Mississippi until Congress approved the economic bail-out plan, but he reversed his decision after some progress was made towards a deal.

September 26, 2008

West ‘agrees new Iran resolution’

West ‘agrees new Iran resolution’

Iran maintains that the purposes of its nuclear programme are peaceful

The foreign ministers of the five permanent members of the UN Security Council and Germany have agreed a draft resolution on Iran’s nuclear programme.

Diplomats said the new resolution would reaffirm three earlier rounds of UN sanctions, and make it clear that the Security Council wants Iran to comply.

The agreement came after discussions between the US and Russia in New York.

On Wednesday, Iran’s president warned it would resist “bullying powers” who tried to thwart its nuclear ambitions.

Addressing the UN General Assembly in New York, Mahmoud Ahmadinejad said his country supported dialogue but would not accept “illegal demands”.

Western powers suspect Iran wants to build a nuclear weapons capability. Tehran says its nuclear programme is peaceful.

The UN Security Council has already imposed three packages of sanctions against Iran for defying its calls to halt uranium enrichment and plutonium reprocessing, and refusing to answer questions from the International Atomic Energy Agency (IAEA).

In a report last week, the agency said that without further information, it would not be able to provide assurances about Iran’s nuclear programme to the international community.

China astronauts braced for walk

China astronauts braced for walk

The spacecraft is now in a stable, circular orbit

China’s three astronauts have spent their first day in orbit preparing for the mission’s spacewalk.

A 42-year-old fighter pilot, Zhai Zhigang, is due to carry out the 20-minute manoeuvre at 1630 Beijing Time (0830 GMT) on Saturday.

It will be the first time Chinese yuhangyuan (astronauts) have ventured outside their spacecraft.

Their Shenzhou VII capsule soared into orbit on a Long March II-F rocket from Jiuquan spaceport in north-west China.

The rocket put the Shenzhou capsule in a near-circular orbit more than 300km above the Earth.

Mr Zhai is joined on the mission by two other “yuhangyuan” – Liu Boming and Jing Haipeng.

The astronauts have been training in a water tank

Zhang Jianqi, one of the chief engineers for China’s space programme, said keeping three men in the spacecraft, and then sending one outside, would be a “big test”.

“This is a big technological leap,” he told state-run news agency Xinhua.

“The risks are quite high. Sending up three astronauts is a jump both in quantity and quality.”

When Mr Zhai carries out his extra-vehicular activity (EVA), he is expected to wear a Chinese-made spacesuit thought to have cost between £5m and £20m ($10m-$40m).

1958: Base for spaceflights built at Jiuquan, in Gobi desert
April 1970: China launches its first satellite into space
1990-2002: Shenzhou I-IV are launched to develop systems
Oct 2003: The first manned space mission launches on Shenzhou V
Oct 2005: The Shenzhou VI mission takes two men into space
Oct 2007: Chang’e-1 orbiter sent on unmanned mission to the Moon

The yuhanguan will be tethered to the capsule with a cable that provides him with life support and a communications link with the spacecraft.

His back-up, Mr Liu, will monitor the activity, presumably to reel the spacewalker back inside if there is an emergency.

Mr Zhai will retrieve an externally mounted experiment and oversee the release of a satellite.

During their 68 hours in orbit, the astronauts will be able to enjoy an unprecedented choice of food. The menu includes spicy chicken with peanuts, shrimps and dry fruits.

“We have tried to make them taste like stir-fried dishes they have on Earth,” Chen Bin, who is in charge of food for the astronauts, told state-run news agency Xinhua.

At the end of the mission, the Shenzhou re-entry capsule will target a landing in north China’s Inner Mongolia Autonomous Region.

China became only the third nation after the United States and Russia to independently put a man in space when Yang Liwei, another fighter pilot, went into orbit on the Shenzhou V mission in October 2003.

Two years later, Fei Junlong and Nie Haisheng completed a five-day flight on Shenzhou VI.

According to the Associated Press, Xinhua posted an article on its website prior to the lift-off that was written as if Shenzhou VII had already been launched into space.

The article reportedly carried a date of 27 September and came complete with a dialogue between the astronauts.

Chinese media report that this latest mission is the “most critical step” in the country’s “three-step” space programme.

These stages are: sending a human into orbit, docking spacecraft together to form a small laboratory and, ultimately, building a large space station.

The Shenzhou VIII and IX missions are expected to help set up a space laboratory complex in 2010.

China launched an unmanned Moon probe last year about one month after rival Japan blasted its own lunar orbiter into space.

September 24, 2008

Which direction for Turkey now?

Filed under: Latest, Politics News, Reviews — Tags: , , , , , , , , — expressyoureself @ 5:24 pm

Which direction for Turkey now?

Guards at Ataturk's Mausoleum in Ankara

The US had feared Turkey was facing too much towards the East

Not so long ago the question of “who lost Turkey?” seemed to dominate US think tank discussions and conferences.

Turkey’s refusal to allow US troops to use its territory to open a second front against Saddam Hussein provoked the worst crisis in relations between Ankara and Washington that many commentators could remember.

Worse, the arrival into power of the Justice and Development Party (the AKP) with its Islamist roots, which then embarked upon a new foreign policy of outreach towards the Middle East, seemed to confirm the fears of many in Washington.

Turkey, they felt, was inexorably being drawn back into the Middle East and Asia and away from its long-standing anchorage in Nato and the West.

With the US presidential election fast approaching, and with the multiplicity of problems in the Middle East set to be at the top of the next administration’s agenda, I came to Turkey to try to answer the question – was this staunch Cold War ally being lost to the West?

Surely things were more complicated? Was Turkey’s new orientation being misunderstood by some in Washington? And what did Turkey itself want from the next US administration?

‘Meaningful contribution’

My first port of call was a pavilion in the grounds of the last sultan’s palace on the edge of the Bosphorus. It is now the Turkish prime minister’s Istanbul office.

There I met Ambassador Ahmet Davutoglu, a quietly spoken academic who is widely acknowledged as the architect of the Turkish government’s new foreign policy.

Ambassador Ahmet Davutoglu (February 2008)
Turkey’s diplomatic power is an asset for our western orientation
Ambassador Ahmet Davutoglu

His 2001 book, entitled Strategic Depth, sought to chart a new course for Turkey in the aftermath of the Cold War.

“There was a need to reinterpret the geographical and historical context of Turkey,” he told me.

“The aim was to reintegrate the country into its surrounding region.”

Nonetheless, he was at pains to point out that these new relationships were compatible with Turkey’s long-standing Atlanticist and European tilt.

“If you have more influence in your own hinterland, you will be a more meaningful contributor to the EU or to Nato,” he told me.

“Turkey’s diplomatic power,” he said, “is an asset for our western orientation.”

There is no doubting the extent to which Turkey has played upon its extraordinary geographical position to develop new diplomatic and trading links.

Today it is as friendly with Syria as it is with Israel. It has close ties with Iran and Saudi Arabia. It has good relations with both Palestinian factions, Hamas and Fatah.

It has developed a strong relationship with Russia and it maintains its strong links with the US and western Europe.

Iraq concern

 

Mr Davutoglu is now the Turkish prime minister’s chief foreign policy adviser.

Turkey, he told me, was looking to play an ever-greater role in the Middle East, and despite all of the ups and downs between Ankara and Washington, ties between them were firm.

A Turkish youth holds a PKK flag (file image)

The US views the Turkish separatist PKK as a security threat

“The Turkish-American relationship is not an ordinary relationship,” he told me.

“It is well-established, it is well-institutionalised, and very sophisticated. Whoever comes to power in Washington, that institutionalised framework will set the basic parameters for the new president.”

It is certainly true that the Bush administration’s decision to view the Kurdish separatist organisation, the PKK, as a threat to US security interests as well as those of Turkey has gone some way to restoring trust between the two governments.

Iraq though, and especially the circumstances of any US troop withdrawal by a new US president, is a major concern for the Turkish authorities.

Veteran commentator Professor Iltar Turan told me that Turkey fears Iraq might simply break up if there is a too hasty US withdrawal; it might degenerate into full-scale civil war.

“Iraq needs to be integrated better,” he told me, “before a full US withdrawal can be entertained.”

We expect and hope that the new US administration will be more supportive of Turkey, but we will have to see
Suat Kiniklioglu
MP

There is also a strong sense here that Turkey’s diplomatic initiatives have not been fully understood or welcomed in Washington.

The Bush administration has been at best indifferent to Turkey’s major initiative in the region – its efforts to broker a peace deal between Israel and Syria.

Four rounds of indirect talks have been held in Istanbul, mediated by Mr Davutoglu himself.

He refused to touch on any detail, such were the sensitivities, but, he assured me, the progress had been remarkable.

Security matters

In Ankara, I went to see one of the AKP’s most prominent foreign policy experts, Suat Kiniklioglu, an MP and spokesman for the Foreign Affairs Committee.

On Syria, he said that the US administration “had been very distant”.

But he believed that the US was belatedly coming around, though he acknowledged that Turkey’s ties with Iran were something that the Bush administration would not favour.

“We expect and hope that the new US administration will be more supportive of Turkey. But you know,” he mused, “we will have to see – there are two very different candidates and there could be two very different Americas, depending upon who will win in November.”

 

So who do the Turks want to see as the next US president?

Not surprisingly, opinions differ.

I think a McCain presidency – especially with Ms Palin as vice-president, would be nothing short of catastrophic
Soli Ozel
Writer and academic

Prof Turan told me that Senator Barack Obama’s inexperience in foreign policy worries many Turks, along with some of the things he has said on issues that matter greatly to Turkey.

“Many of us,” Prof Turan told me, “think that the election of Senator John McCain who is familiar with security matters – and the US-Turkish relationship is to a large extent based on security concerns – is better.”

The leading writer and academic Soli Ozel took a different view. He told me that he favours Mr Obama.

“I think a McCain presidency – especially with Ms Palin as vice-president – would be nothing short of catastrophic,” he said.

“A white man of 72 years of age who is a Republican – I don’t think that is what the world looks to in order to mend relations with America around the globe, so I think that whatever is going to be good for the world, ought to be necessarily good for Turkey.”

Official spokesmen obviously do not want to be drawn into the political fray.

But Mr Davutoglu told me that Turkey wanted greater US attention to the crisis around its borders.

“The Turkish foreign agenda is like the United Nation’s agenda”, he argues.

“What do you have on UN agenda today? The Palestinian question, the Iraqi question, the Iranian question, the Caucasian question, the Kosovo question – they are all on Turkish foreign policy agenda too,” he said.

“Without Turkish involvement,” he went on, “it is going to be difficult to solve any of these crises. So Turkish strength, in terms of hard power, of soft power, in terms of economic relations, is an asset for any American administration.”

‘Derivative policies’

 

To get the perspective of someone with a foot in both countries, I went to see Soner Cagaptay of the Washington Institute for Near East Policy.

He heads their Turkish research programme and is currently in Istanbul teaching for three months.

EU foreign policy chief Javier Solana (R) welcomes Turkish Foreign Minister Ali Babacan at the EU headquarters in Brussels (15/09/2008)

Turkey can look elsewhere if it is rejected by the EU

“Turkey policy in Washington,” he says, “has always been a derivative of other policies – of Iraq policy, of Afghanistan policy and maybe now even of Georgia policy.

“Turkey is important as a secondary partner, not as a primary partner, with which the US envisions its big foreign policy debate.”

Whoever takes over in Washington, he says, needs to take a view of Turkey from 30,000 feet up; to realise that it is important when the US plans policies, not only when it is implementing them.

“This,” he argues, “would probably give the Turks the sense of importance they are trying to find in the region, and it would be one way for the next US president to counter Turkey’s ongoing rapprochement with Russia and Iran.”

In my week shuttling between Istanbul and Ankara, it seemed clear that Turkey was proud and confident of its considerable diplomatic achievements .

It wants these to be seen as an asset by the West too.

Turkey’s new regional aspirations are not to be seen as being in conflict with its anchorage in the western camp.

But if the West rejects Turkey – and by this Turkish commentators generally mean the European Union – then Turkey does have other cards to play.

No wonder then that the EU’s ambivalence towards Turkey creates so much unease in Washington.

September 19, 2008

Top Republican says Palin unready

Top Republican says Palin unready

Chuck Hagel

Senator Chuck Hagel could be influential with independent voters

Senior Republican Senator Chuck Hagel has voiced doubts about Sarah Palin’s qualifications for the vice-presidency.

John McCain’s running mate “doesn’t have any foreign policy credentials”, Mr Hagel told the Omaha World-Herald.

Mr Hagel was a prominent supporter of Mr McCain during his 2000 bid for the US presidency, but has declined to endorse either candidate this year.

He was opposed to the Iraq War, and recently joined Mr McCain’s rival Barack Obama on a Middle East trip.

‘Stop the nonsense’

“I think it’s a stretch to, in any way, to say that she’s got the experience to be president of the United States,” Mr Hagel told the Omaha World-Herald newspaper.

And he was dismissive of the fact that Mrs Palin, the governor of Alaska, has made few trips abroad.

“You get a passport for the first time in your life last year? I mean, I don’t know what you can say. You can’t say anything.”

This kind of thing will have an effect on independents

Mr Hagel also criticised the McCain campaign for its suggestion that the proximity of Alaska to Russia gave Mrs Palin foreign policy experience.

“I think they ought to be just honest about it and stop the nonsense about, ‘I look out my window and I see Russia and so therefore I know something about Russia’,” he said.

“That kind of thing is insulting to the American people.”

Justin Webb says Mr Hagel’s opinion of Mrs Palin will have an effect on independent voters.

A senior member of the Senate Foreign Relations Committee, Mr Hagel was a close ally of Mr McCain, but the two men parted company over the decision to go to war in Iraq.

Mr Hagel skipped this year’s Republican National Convention in favor of a visit to Latin America.

Mr Hagel’s decision to accompany Mr Obama this summer on a trip to Iraq and Israel, as part of a US Congressional delegation, led to speculation that he would throw his support behind the Democratic nominee.

However, a spokesman for the Nebraska senator insisted in August that “Senator Hagel has no intention of getting involved in any of the campaigns and is not planning to endorse either candidate”.

Rice criticises ‘isolated’ Russia

Rice criticises ‘isolated’ Russia

Russia is becoming increasingly authoritarian at home and aggressive abroad, US Secretary of State Condoleezza Rice has said.

In a strongly-worded speech, Ms Rice said Moscow was on a “one-way path to isolation and irrelevance”.

Diplomatic relations between the US and Russia have been strained by the recent conflict in Georgia.

Earlier, Russia’s president said the two nations should not risk established ties over “trivial matters.”

Dmitry Medvedev said it would be “politically short-sighted” if Washington and Moscow were to endanger their political and economic ties.

However, Ms Rice suggested in her speech that following the conflict in Georgia, Russia’s bid to join the World Trade Organization had been put in doubt.

Russia’s leaders violated Georgia’s sovereignty and territorial integrity and launched a full-scale invasion
Condoleezza Rice

The US has already shelved a civilian nuclear deal with Russia, but despite tensions the two countries are maintaining diplomatic links.

Ms Rice held a telephone conversation with Russian Foreign Minister Sergei Lavrov just hours before delivering her speech, and Russia is also due to join an international meeting on Iran’s nuclear program on Friday.

Our correspondent says Moscow is also telling the US that its co-operation is needed over issues like Iran and North Korea, with many in Washington feeling the Russians have a point.

Several hours after Ms Rice spoke, it emerged that a Russian submarine test-fired an intercontinental ballistic missile capable of carrying nuclear warheads.

An official from Russia’s defence ministry is quoted as saying that the test – carried out in Russia’s far-eastern Kamchatka peninsula – went according to plan.

‘Deeply disconcerting’

Speaking at an event organized by the German Marshall Fund in Washington, Ms Rice acknowledged that Georgia had fired the first shots in the breakaway region of South Ossetia.

Russian troops in the South Ossetian capital, Tskhinvali

Ms Rice said Russia had tried to dismember Georgia

“The Georgian government launched a major military operation into Tskhinvali [the capital of South Ossetia] and other areas of that separatist region,” she said.

“Regrettably, several Russian peacekeepers were killed in the fighting,” she added.

But Ms Rice said that Russia had escalated the conflict.

“Russia’s leaders violated Georgia’s sovereignty and territorial integrity and launched a full-scale invasion across an internationally recognized border,” she said, adding that Russia had also violated the terms of a ceasefire negotiated by French President Nicolas Sarkozy.

Ms Rice said it had been “deeply disconcerting” that Russia had tried to “dismember” Georgia by recognizing Abkhazia and South Ossetia, and argued that Russia’s actions were part of what she described as a “worsening pattern of behavior”.

“I refer… to Russia’s intimidation of its sovereign neighbours, its use of oil and gas as a political weapon… its threat to target peaceful neighbours with nuclear weapons… and its persecution – or worse – of Russian journalists and dissidents,” she added.

Pledging help to rebuild Georgia, Ms Rice said the US and Europe would not let Russia benefit from aggression.

‘Taking the bait’

Ms Rice admitted that Georgia could have responded better to the events last month in South Ossetia.

We will not allow Russia to wield a veto over the future of our Euro-Atlantic community
Condoleezza Rice

“We warned our Georgian friends that Russia was baiting them, and that taking this bait would only play into Moscow’s hands,” she said.

However Ms Rice, an expert on the Soviet Union, also said that Russia could not blame its behavior on the enlargement of Nato.

“Since the end of the Cold War, we and our allies have worked to transform Nato… into a means for nurturing the growth of a Europe whole, free and at peace.”

The promise of Nato membership had been a positive incentive for states to build democratic institutions and reform their economies, she added.

And she insisted that Russia would not be allowed to dictate who joined the Nato alliance.

“We will not allow Russia to wield a veto over the future of our Euro-Atlantic community – neither what states we offer membership, nor the choice of those states to accept it,” she said

“We have made this particularly clear to our friends in Ukraine.”

The secretary of state was also critical of the domestic situation inside Russia.

“What has become clear is that the legitimate goal of rebuilding Russia has taken a dark turn – with the rollback of personal freedoms, the arbitrary enforcement of the law [and] the pervasive corruption at various levels of Russian society,” she said.

Russia’s leaders were risking the future progress of the Russian people, she said, declaring that Russia’s leaders “are putting Russia on a one-way path to self-imposed isolation and international irrelevance”.

September 18, 2008

Australia MPs oppose uranium sale

Australia MPs oppose uranium sale

Undated BHP Billiton photo of the Olympic Dam copper and uranium operation in Roxby Downs, Australia

Australia has 40% of the world’s known uranium resources

Australia should not sell uranium to Russia, a parliamentary committee says.

It said the $800 million deal should not go ahead until Russia assuaged doubts about the separation of its civilian and military uses of uranium.

The deal was signed by former Prime Minister John Howard and Russian leader Vladimir Putin last year.

The committee said assurances were needed on Russia’s compliance with, and long-term commitment to, the Nuclear Non-Proliferation Treaty.

Opposition members of parliament supported the uranium sales. They argued Australia would benefit from the trade, and said safeguards against any future military use of the uranium were adequate.

But the report presented to parliament on Thursday recommended that “further consideration is given to the potential ramifications for this agreement”.

The committee said any facilities taking Australian uranium should be inspected by the International Atomic Energy Agency.

Russia has insisted that it would only use Australian uranium for civilian purposes, to generate power at home, and would not export it for use elsewhere.

Some reports of the committee’s findings suggested that opposition to the deal was strengthened by Russia’s recent incursions into Georgia.

Australia’s Foreign Minister Stephen Smith warned earlier this month that if Russia failed to withdraw its troops from neighboring Georgia, Australia might withhold approval of the new agreement.

Australia has 40% of the world’s known uranium resources and exports the product to more than 30 countries under strict conditions.

September 17, 2008

Investors edgy as US stocks fall

Investors edgy as US stocks fall

A trader reacts to news in the Philippines

Investors are concerned that financial markets will remain volatile.

US stock markets sank in early trade on fears the bailout of insurance giant AIG would not be enough to dispel the gloom engulfing the financial world.

AIG’s rescue and a potential takeover of UK lender HBOS had earlier boosted confidence in Asia and Europe.

But markets were volatile as nervous investors tried to make sense of the dramatic events that have unfolded in recent days.

The widely watched Dow Jones industrial average was down 1.9% at 10,849.

Top UK mortgage lender HBOS, which has faced heavy selling this week, fell as much as 50% before recovering after it emerged that it was in advanced talks to be taken over by Lloyds TSB.

HBOS shares were down 13% at 160 pence in London, the biggest faller in the FTSE 100, after being the top gainer at one point.

It has been a tumultuous week on financial markets, with significant changes in the financial landscape.

Key events on Wednesday included:

  • Beleaguered HBOS in merger talks with Lloyds TSB after a steep fall in its share price
  • US insurance giant AIG being bailed out by the US government
  • Volatile stock markets as global investors remain nervous
  • Trading on the Russian stock exchange being suspended
  • Barclays snapping up key assets from Lehman Brothers after its bankruptcy

I don’t think anyone has got any or much confidence in market direction for more than a few days
Darren Winder, Cazenove

The FTSE 100 index of top UK shares was down 0.48% at 5,001.4, reversing earlier gains, with some banking shares hard hit.

Shares in Barclays were up 9.8%, Lloyds TSB climbed 7.9% while Royal Bank of Scotland was down 2.6%.

Topsy-turvy trade

Trade is likely to remain rocky amid concern that financial system instability will continue after the dramatic events of the past few days.

“I don’t think anyone has got any or much confidence in market direction for more than a few days,” said Darren Winder, a strategist at Cazenove.

AIG’s bail-out follows the collapse of US investment bank Lehman Brothers, which caused share prices to plummet across the world’s financial markets.

Another investment bank, Merrill Lynch, has been sold off to Bank of America.

France’s Cac 40 share index was down 0.24%, while Germany’s Dax index was 0.64% lower, reversing earlier gains as Wall Street opened.

Russia’s stock exchange suspended trade following steep falls in shares.

Asian shares had a mixed session. Stocks in Tokyo, Taipei, and Seoul all rose, although prices in Hong Kong, Shanghai and Australia lost ground.

Japan’s Nikkei 225 index ended up 1.2% at 11,749.79, having risen by as much as 2.3% earlier in the day. The index had hit a three-year low on Tuesday.

Hong Kong’s Hang Seng index ended down 3.6% at 17,637.19 points.

September 15, 2008

Insight: Who runs Russia?

Insight: Who runs Russia?

Vladimir Putin (L) and Dmitri Medvedev

Vladimir Putin (L) and Dmitri Medvedev must agree policy decisions

Getting to the bottom of the shadowy depths of Kremlin decision-making is tricky. Machiavellian power struggles, dark paranoia of security chiefs and long fingers of corruption can turn seemingly rational and transparent explanations inside out.

But even public signals are instructive, and in the wake of the Georgia crisis, Russia’s leadership is taking stock and has several messages for the West.

The first key question about Russia is – who is really in charge?

The standard answer is President Medvedev as Commander in Chief. He, and only he, ordered Russian troops across the border to hit back when Georgia attacked on South Ossetia.

But presidential power is now the tip of an iceberg. What murky currents swirl beneath the surface is less clear.

Dmitry Medvedev says he was caught unawares and admits his relative inexperience.

“I was on holiday on the Volga when the defence minister called,” he said at a conference of the so-called ‘Valdai Club’ of foreign academics and journalists who specialize in Russia.

“I’ll never forget that night, knowing the consequences there would be when I gave the order to return fire… especially when I’d only been president for 95 days,” he said.

But what about Russia’s ex-president, now his prime minister, who was also at the conference?

“However much authority I have, whoever I may be talking to, none of the troops or tanks would have moved an inch until President Medvedev’s order,” was Vladimir Putin’s attempt to deny his own importance when we asked about his role, thereby indicating that his clout and involvement were considerable.

Bridget Kendall
1998 to present: BBC diplomatic correspondent
1994-98: Washington correspondent
1989-94: Moscow correspondent

What is more, at the outset of the crisis, when Mr Putin was in Beijing for the opening of the Olympic Games, he was already thinking about Russia moving swiftly to recognize the two enclaves at the heart of the crisis.

He had taken the time, he told us, to inform the Chinese leadership that Russia would understand if Beijing chose not to react.

Double act

It begs the question – who is really driving policy, the president or the prime minister?

The choreography and timing of our audiences with both were instructive.

A pair of three-hour meetings, two elegant luncheon settings, two declarative statements for Russian TV cameras at the start, and even two carefully informal blue suits with matching ties.

All to signal, perhaps, that their status is equal – a dual leadership exercising power in tandem.

I never thought I’d need to use harsh rhetoric when I began this job. But there are some moments as president when you are left with no choice
Russian President, Dmitri Medvedev

Indeed one senior government official made a point of emphasizing the duality, constantly referring to them in the same breath.

Policy decisions had to be cleared with both, he said. And what was wrong with that? A double act surely strengthened, not muddled governance, requiring a green light from two instead of one.

We met Mr Putin first. Almost the entire discussion was devoted to foreign policy.

He was burning to give his point of view. He seemed supremely confident, engaged and in charge. His anger at the way he felt Russia had been treated in recent years blazed through, as though it was his own personal animosity which is now firing and fuelling current policy.

It was hard to remember he was no longer president.

Economic policy, supposedly at the heart of his new job as prime minister, came up sporadically and he admitted he is still mastering his new brief.

When he did comment directly on Dmitry Medvedev, the impression he left was curious.

Mr Putin seemed to want to play up the differences between them, as though suggesting a “good cop, bad cop” routine.

He described himself as “conservative” and with an uncharacteristic flash of self-deprecation admitted his penchant for blunt speaking was sometimes a liability.

Whereas he described Dmitry Medvedev as bright, young and highly educated, with modern and – he stressed this twice – liberal views.

“He’s a good lad,” said Mr Putin a touch condescendingly, as though recommending his young protege to a would-be employer for a new job.

The aim, it seemed, was to send a signal to the West that Dmitry Medvedev is indeed more flexible and reformist than Putin himself – and was forced to act tough because the crisis left him no option.

Moral high ground

So the US and its allies should understand they had made a big mistake by allowing this conflict to happen – and they would make an even bigger mistake unless they made the compromises Russia now wants.

When we met Dmitry Medvedev he underscored the point.

“I never thought I’d need to use harsh rhetoric when I began this job. But there are some moments as president when you are left with no choice,” he said.

“I very much don’t want the Caucasus crisis to destroy Russian co-operation with Europe and the United States,” he elaborated, and suggested he felt frustrated at his new role of “President of War”.

He’s a good politician, I think I have a better opinion of George than most Americans
Vladimir Putin on George W Bush

“A whole month has been lost on this war… I’d rather have been doing other things,” he said. “Yesterday when I met the defence and finance ministers, instead of talking about car and tractor production, we had to discuss where to deploy the Russian army. Priorities have had to change.”

So what, then, at this juncture does Russia want from the West?

The first message is that the Russian government is in no mood to compromise.

It insists it occupies the moral high ground in this crisis and sees no reason to give way.

This was tantamount to Russia’s 9/11, President Dmitry Medvedev declared to us, a defining moment in national policy and in relations with the outside world.

That conviction was echoed from top to bottom in our discussions with government officials, mainstream academics and journalists, all of them insisting Russia had no choice but to respond militarily and take South Ossetia and Abkhazia under its wing.

Any suspicion that Russia cunningly laid a trap that Georgia rashly walked into was dismissed as an outrageous lie.

The idea that by deploying troops deep inside Georgia and unilaterally recognising the two disputed enclaves’ independence Russia had gone too far was rejected out of hand.

The suggestion that by invading Georgian territory, and asserting its right to redraw the map, Russia made itself look like a bully, was also thrown out.

Instead President Saakashvili was blamed for triggering the conflict.

The United States had nudged him into it and rashly armed and trained his men while Europeans had looked the other way.

Any Western criticism to the contrary was hypocritical, given interventions in Kosovo and Iraq, and yet another example of anti-Russian hysteria and unfair stereotyping, based on prejudices left over from the Cold War.

Red line

Curiously both Mr Putin and President Medvedev were carefully respectful when it came to President Bush.

“He’s a good politician, I think I have a better opinion of George than most Americans,” said Mr Putin, at the same time complaining that he had twice tried to get the US president to intervene.

Instead it was Vice-President Cheney and the US Secretary of State Condoleezza Rice, with their Soviet expertise, who were targeted as villains, suspected of fueling anti-Russian sentiment in the US administration and egging Georgia on.

“We need to get rid of stereotypes. The US president has too many Sovietologists in his entourage,” observed Dmitry Medvedev caustically.

A Russian tank crosses a main route in Georgia

Russia is keen to avoid accusations of annexing Georgian territory

The second message that came through clearly was that Russia’s “red line” – any move to extend Nato to Russia’s borders by seeking to incorporate Georgia or Ukraine – still stands.

What Russia really wants is a new discussion on European security arrangements to replace Nato with something else entirely.

But short of that, attempts by the United States or Nato to rearm Georgia or to extend formal invitations to either Georgia or Ukraine to join the alliance seem likely to prompt a furious Russian response.

“Russia has zones that are part of its interests. For the West to deny it is pointless and even dangerous,” said President Medvedev.

“It’s unjust, it’s humiliating, and we’ve had enough. It’s something we are no longer prepared to endure,” he said. “You have a very clear choice here. Let there be no doubt about it.”

What exactly Russia would do to try to prevent this further Nato enlargement was left unclear.

“We’ll do all we can to make sure it doesn’t happen,” said Mr Putin carefully, talking about Ukraine.

Although on Georgia he noted Russian tanks had been within 15 kilometres of Tbilisi and could have taken the capital in four hours.

Economic concerns

So the hints of a threat, but not exactly – and that is interesting. Because the third message that came through was that Russia would like to think a major East-West confrontation can still be avoided.

There may well be powerful forces in Russia’s military and security elite, ultra nationalists who would like to see their country retreat from global integration and rely once more on internal resources – economic and military – as in Soviet days, to reclaim influence geographically and show the outside world Russia’s might can no longer be ignored.

Roubles being sorted at the Goznak mint in Moscow

Russia’s stock market value has fallen by 50% since May this year

But diplomatic and economic isolation does not seem to be what the Kremlin leadership currently wants to embrace.

The haste with which both Mr Putin and Mr Medvedev shrugged off the notion that Russia might have to pay a price for this crisis was telling.

They denied that the loss of nearly 50% of Russia’s stock market value from its all time high in May had much to do with the Georgia crisis.

A far more likely cause, they argued – with some justification, given what is happening on Wall Street – was the impact of global financial instability.

In comparison to many other countries, they insisted, Russia’s economy was in good shape – signs of capital flight were temporary. Foreign investors would be back. Russia’s energy resources were needed by everyone and it had weathered economic storms before.

The fact only Nicaragua had joined Russia in recognising Abkhazia and South Ossetia was also dismissed as unimportant, even if the glaring lack of overt diplomatic support for Russia’s actions appears to be a sensitive point.

When the leader of South Ossetia told us he intended to follow up independence by amalgamating his tiny republic with North Ossetia and becoming part of the Russian Federation, he was hurriedly slapped down. Within hours he had issued a retraction.

Outright annexation by Russia of what is, after all, legally speaking Georgian territory is an accusation Moscow seems anxious to avoid.

Yes, Russia wants to claim that the ball is now firmly in the court of the US and its allies – that it is up to them, not Russia, to decide how this geopolitical crisis plays out.

But behind all the moral outrage, I felt there was also a nervousness, a worry that if Russia’s bluff is called and further tensions with the West ensue, it might force a stand-off from which neither side could back down.

“There is a chill in the air and a loss of trust,” said Dmitry Medvedev, “but I don’t think this is a corner turn that will lead to a long confrontation. This is not what we want. And it’s not what you want either.”

September 12, 2008

Obama win preferred in world poll

Obama win preferred in world poll

Sen Barack Obama in Flint, Michigan, on 8 September 2008

Most thought US relations would get better under a president Obama

People outside the US would prefer Barack Obama to become US president ahead of John McCain, a BBC World Service poll suggests.

Democrat Mr Obama was favored by a four-to-one margin across the 22,500 people polled in 22 countries.

In 17 countries, the most common view was that US relations with the rest of the world would improve under Mr Obama.

If Republican Mr McCain were elected, the most common view was that relations would remain about the same.

The poll was conducted before the Democratic and Republican parties held their conventions and before the headline-grabbing nomination of Sarah Palin as Mr McCain’s running mate.

The results could therefore be a reflection of the greater media focus on Mr Obama as he competed for the presidential candidacy against Hillary Clinton.

Pie chart

The margin of those in favor of Mr Obama winning November’s US election ranged from 9% in India to 82% in Kenya, which is the birthplace of the Illinois senator’s father.

On average 49% preferred Mr Obama to 12% in favor of Mr McCain. Nearly four in 10 of those polled did not take a view.

On average 46% thought US relations with the world would improve with Mr Obama in the White House, 22% that ties would stay the same, while seven per cent expected relations to worsen.

Only 20% thought ties would get better if Mr McCain were in the Oval Office.

The expectation that a McCain presidency would improve US relations with the world was the most common view, by a modest margin, only in China, India and Nigeria.

But across the board, the largest number – 37% – thought relations under a president McCain would stay the same, while 16% expected them to deteriorate.

In no country did most people think that a McCain presidency would worsen relations.

Sen John McCain in Sterling Heights, Michigan, on 5 September 2008

Some 30% of Americans expected relations to improve under Mr McCain

Oddly, in Turkey more people thought US relations would worsen with an Obama presidency than under Mr McCain, even though most Turks polled preferred Mr Obama to win.

In Egypt, Lebanon, Russia and Singapore, the predominant expectation was that relations would remain the same if Mr Obama won the election.

The countries most optimistic that an Obama presidency would improve ties were US Nato allies – Canada (69%), Italy (64%), France (62%), Germany (61%), and the UK (54%) – as well as Australia (62%), along with Kenya (87%) and Nigeria (71%).

When asked whether the election as president of the African-American Mr Obama would “fundamentally change” their perception of the US, 46% said it would while 27% said it would not.

The US public was polled separately and Americans also believed an Obama presidency would improve US ties with the world more than a McCain presidency.

Forty-six per cent of Americans expected relations to get better if Mr Obama were elected and 30% if Mr McCain won the White House.

A similar poll conducted for BBC World Service ahead of the 2004 US presidential election found most countries would have preferred to see Democratic nominee John Kerry beat the incumbent George W Bush.

At the time, the Philippines, Nigeria and Poland were among the few countries to favor Mr Bush’s re-election. All three now favor Mr Obama over Mr McCain.

In total 22,531 citizens were polled in Australia, Brazil, Canada, China, Egypt, France, Germany, India, Indonesia, Italy, Kenya, Lebanon, Mexico, Nigeria, Panama, the Philippines, Poland, Russia, Singapore, Turkey, the UAE and the UK. A parallel survey was conducted with 1,000 US adults.

Polling firm GlobeScan and the Program on International Policy Attitudes carried out the survey between July and August.

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